Question:
DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $135,000. The firm has a chance to sell its 5-year-old roaster for $35,100. The existing roaster originally cost $59,800 and was being depreciated using MACRS and a 7-year recovery period.
DuPree is subject to a 40% tax rate.
a. What is the book value of the existing roaster?
b. Calculate the after-tax proceeds of the sale of the existing roaster.
c. Calculate the change in net working capital using the following figures:
Anticipated Changes
in Current Assets
and Current Liabilities
Accruals .................. - $ 19,200
Inventory .................... + 50,600
Accounts payable .......... + 39,300
Accounts receivable ....... + 69,900
Cash ................................... 0
Notes payable ................ +15,500
Question:
DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $135,000. The firm has a chance to sell its 5-year-old roaster for $35,100. The existing roaster originally cost $59,800 and was being depreciated using MACRS and a 7-year recovery period.
DuPree is subject to a 40% tax rate.
a. What is the book value of the existing roaster?
b. Calculate the after-tax proceeds of the sale of the existing roaster.
c. Calculate the change in net working capital using the following figures:
Anticipated Changes
in Current Assets
and Current Liabilities
Accruals .................. - $ 19,200
Inventory .................... + 50,600
Accounts payable .......... + 39,300
Accounts receivable ....... + 69,900
Cash ................................... 0
Notes payable ................ +15,500
